The festive period is one of the busiest times for a care home – all kinds of extra activities are planned and the traffic of visitors can be double what it normally is. It is also the busiest time for Insurers as both personal and commercial clients are exposed too much greater risks during this period (fire claims alone have been known to increase by up to 26% during December). Any damage or loss to your business can be a costly coal in your stocking, but most can be avoided by taking simple precautions to protect yourself and your business.

Lights

At this time of year, lots of lights, decorations and candles are a key feature of the celebrations. It goes without saying that candles and any naked flames pose a specific fire risk so this will need to be considered as part of your risk assessment procedures. It is best to avoid using candles if possible, but if you are going to use them it is important to ensure that all candles are encased in a candle holder and placed on a heat resistant surface. They should also be kept away from fabrics and should never be left burning overnight.

Take a moment to review the tree lights you want to use – check they have been tested thoroughly and inspect them visually, looking for bare wires or frayed insulation. It is also important to check that any lights being used conform to the British Safety Standards and if they are no longer under warranty (usually if they are older than 12 months) that they have been PAT tested. Make sure that you don’t overload plug sockets and you should ensure power leads and cables do not pose any trip hazards. It is also advisable that all lights need to be turned off overnight.

Of course, it goes without saying, make sure your smoke alarm is in proper working order and test it regularly.

Trees & Decorations

It is vital that you do not place your Christmas tree or flammable decorations near a source of heat (like candles, an open fire or cooking equipment). You also need to ensure that your tree is situated in a place which gives reasonable access to the tree while ensuring it does not obstruct exits and evacuation routes. Check it is held securely in place so that it cannot toppled over as it could cause a serious injury if it falls on someone. It may also be worth considering an artificial tree to avoid any risk posed by pine needles, such as slipping, getting them stuck under the skin, allergic reactions or the increased fire risk. You can even look into buying a flame resistant, non-allergenic tree.

The Weather

This time of year brings with it longer nights and a drop in the temperature. It is essential that you ensure that all exterior surfaces of the home are well lit and have been well gritted to prevent residents, staff and visitors from tripping over or slipping on ice. Making sure the home is well maintained and in good working order before any severe weather hits will help you prevent damage to the property from the wind, rain and snow. Clear out any guttering and drains, check your roof (including sheds, garages and outbuildings) and consider pruning any low hanging branches from nearby trees.

Frost can cause burst pipes risking water damage. It is important to familiarise yourself with the location of your stopcock in case of emergencies. It’s also worth lagging pipes and checking your water tank is insulated and also consider lagging outside taps to prevent them from freezing.

Visitors

It is very common for a care home to expect an increased number of visitors during the festive period. This not only opens your business up to a greater risk of someone doing something untoward in your home (theft, abuse etc) but also of a third party injuring themselves on your premises. It is vital to complete full security checks for anyone being allowed on site and giving the visitors identification so that staff know who should and who should not be on the premises at all times. It is also essential to keep a record the amount of people in the building as this will be imperative in ensuring everybody’s safety in the event of a fire. As stated before, it is important to ensure the grounds around your property are safe and the risk of any visitor slipping and hurting themselves is miminised.

Is your cover adequate?

Finally, check your insurance documents to ensure that you are adequately covered if the worst does happen –

Are your sums insured for your contents high enough to cover the extra items at the home during this time?

Do you have adequate business interruption cover should the home need to be closed due to fire or flooding?

Does your current policy give enough cover for any public in employee liability claims?

Does your current policy contain any terms or exclusions around theft or liability that may leave you exposed to the cost of settling a claim yourself?

If you are unsure about your cover then call the Care Team at ALDIUM for a free, no obligation review of your Insurance Schedule on 0151 336 5881 (option 1) or email us at care@aldium.co.uk

The Insurance Act 2015 came into force on the 12th of August 2016 and changes the way the law deals with the duty of disclosure for commercial insurance contracts. The purpose of The Insurance Act is to update the current law to reflect the way in which the insurance market has evolved in modern times with the aim being to achieve a fair and balanced regime between Insurers and Insureds.

What is The Insurance Act?

The aim of The Insurance Act is to improve fairness, transparency and certainty around the rules that govern contracts between Insurers and their Clients. It aims to provide legal protection for Clients if they unknowingly give incorrect or incomplete information to their Insurer. The hope is that the Client has taken a policy out with the complete knowledge of how the policy works and what to expect if they have a claim.

Will The Insurance Act apply to your contract?

Variations to contracts of insurance entered into on or after 12/08/16, whenever the original contract was entered into.

Renewal of contracts of insurance entered into on or after 12/08/16, whenever the original contract was entered into.

How will the act change the way you take out insurance?

You will still be required to disclose all material facts to your Broker when getting quotes for your insurance, but The Insurance Act also requires the broker to ensure they have clarified any information given to them by you if any of it is unclear or non-specific. The idea behind this is that it compels the Broker to be more proactive in gathering information about your business that may be pivotal to the cover you are being offered, and more importantly, it gives you as the Client more protection against claims being rejected by Insurers on a technicality that isn’t relevant to the claim.

What responsibilities fall to the client under the new act?

Before you take an insurance policy you will need to ensure that you have made a fair representation of risk. This would mean that you have given the Insurer accurate details of any matter that may influence their decisions when underwriting your policy in a clear and accessible manner. The responsibility has been placed on the Client to make a reasonable search for information about the business to allow the Insurer to know the business in its widest sense.

This can involve:

Ensuring that your Broker is aware of who it is in your business that holds the relevant information which needs to be disclosed and how it is audited. This will usually be a member or members of your senior management team, though that could also include (but is not limited to) your accountant or administrator.

Providing information in as clear and accessible manner as possible, ensuring adequate signposting of any important information that you feel is relevant to the policy being proposed.

Making sure that your Broker is aware of any changes to your circumstances during your policy period as cover will be provided on the basis of the information originally provided and it is your responsibility to keep your broker informed of any changes made to that information.

What changes are being made to how Insurers handle claims?

The Insurance Act has introduced proportionate remedies for dealing with claims when there has been a misrepresentation of fact.

Before The Insurance Act came into place, all claims may have been refused and a policy may have been cancelled with effect from its start date if all of the relevant information had not been disclosed, or was incorrect, even if it was done so unintentionally. The Insurer would also be within their rights to retain any premium paid to them. The new legislation now means that a “proportionate remedy” will apply if a fair presentation of the risk was not given and the failure to do so was not deliberate or reckless.

The policy may still be cancelled and the claim refused if the Insurer would have refused your policy initially had all of the relevant information been disclosed, but under The Insurance Act you would be issued with a return of your premium.

If the Insurer would still have offered cover under the newly disclosed circumstances then they must pay that claim based on the cover, premium and terms they would have originally issued that policy under had a fair presentation of risk been given at the beginning of the policy, and the payment of the claim would be proportionate to the cover you actually purchased. For example: If you paid £1000 for a policy that would have cost you £2000 had the presentation of the risk been accurate, then the Insurer would pay you half of the claim. Also, if the insurer would have applied different terms to the policy had a fair presentation been given (such as a higher excess) then these terms would also apply.

Any failure to provide a fair representation of risk that is found to be deliberate or reckless would mean that your Insurer can cancel the policy with effect of its start date, refuse to play a claim and also retain any premium you have paid for that policy. The onus lies with the Insurer to prove that the Client had been deliberate or reckless when presenting the risk, not the Client.

Warranties

A warranty is a condition applied to your policy which requires you to do something, such as ensuring your burglar alarm is activated when the property is unoccupied overnight. Prior to the Insurance Act coming into force it was possible for an insurer to refuse a claim on the basis of that condition not being met, even if the claim reported was not connected in any way to the warranty in place (e.g. refusing a flood claim because the burglar alarm was not activated overnight).

Under The Insurance Act warranties will only apply to the specific circumstances of the loss (for example; an intruder alarm not being operative when there is an alarm warranty on the policy will not affect a flood claim). Instead Insurers can suspend specific areas of a policy if that warranty isn’t being met until the situation has been rectified by the client (e.g. suspending theft cover while your burglar alarm is not working) without it effecting other areas of your cover.

In order to ensure that you remain fully protected you must continue to advise your broker on any warranty on the policy that you cannot comply with.

What can you do to ensure you are compliant with the Insurance Act?

Make sure that you have given yourself plenty of time before accepting a policy to gather all of the relevant information required.

Seek confirmation from senior management that you have gathered all necessary information.

Consult with anyone else in the Business who may hold relevant information to the insurance you are arranging, i.e. if you are looking to take out Cyber Protection then it may be worthwhile consulting your IT Manager.

Present this information as clearly as possible to your Broker making sure to signpost anything that you feel may be of significant interest to the Insurers. It is important that your Broker have a true and accurate assessment of your business and the risk involved in insuring it.

Be prepared to answer further questions from your Broker. You are responsible for making sure they are fully informed of anything that may be relevant to your cover.

Make sure that you fully understand the information being given to you by your Broker. If you are uncertain of anything they have said or written in your documentation, it is important that you ask as many questions as needed to ensure you are getting the cover you need as it is you who will be singing off on that information and making your policy contract certain.

What are ALDIUM doing to assist their Clients with The Insurance Act?

As your Insurance Broker you can rest assured that we are on hand to help you understand your obligations under The Insurance Act and to guide you through the process of gathering the information required to make a fair presentation.

We will:

Provide guidance to our Clients on The Insurance Act itself and any new responsibilities on their part.

Review existing policies to assess the impact The Insurance Act has on them

Review any renewal terms and make our Clients aware of any changes Insurers are making to their policies as a result of The Insurance Act.

Insurance can be a nuisance. It’s something that you are required to have in place, it means having to speak to several Brokers to ensure you’re getting the best price, and getting numerous quotes can take up a significant portion of what little spare time you have as a Care Home owner.

Looking for best value care home insurance

It seems that we have all been conditioned over the years to expect a battle when looking for the best value, and it can appear that the insurance advisor on the other end of the phone is more interested in how much money they can get off you than they are in ensuring that you are getting the most appropriate cover for your business. You can assume that all insurance brokers know this. They know that, within the Care Home Insurance market, they have a client base who doesn’t always have the time to shop around, and one that is already under massive financial constraints and so will often take out a policy based solely on price.

High risk in care home insurance

The Care Insurance market is a very risky market for insurers to get involved in – any industry where the care of a vulnerable person is entrusted to somebody being paid a wage to do so means massive exposure to potential liability claims. Abuse is a very serious risk that the majority of care businesses professionally assess and minimise any potential risk. For many years, established care procedures, rigorous training, accurate record keeping and live audits have ensured that incidents against service users are minimised. However media coverage around the care industry has increased massively over the last few years especially with regards to abuse suffered by service users at the hands of care staff. The consequences of this are likely to be an increased awareness leading to an increased number of requests for reassurance by relatives, increased vigilance by regulators and certainly increased respect for every incidence of whistle-blowing or allegation of abuse. Local authorities may well insist on additional evidence of risk assessments to ensure their placements/referrals are suitably protected.

People who may make abuse allegations

Raising awareness in the media is likely to give comfort to service users and their families who feel that they or a relative have been abused to come forward and notify their grievances. Allegations of abuse can come from:

Service users.

Families of service users.

Current staff at the care home.

Care workers who have left establishments may submit allegations for the period they were working for care providers.

So as well as current staff, service users and their families potentially making allegations, any person previously involved with the organisation may now bring forward allegations.

The Claims Connection website here illustrates how there are claims “farmers” out there who are seeking to make “no win no fee” claims for abuse against care homes, and this is just one of many of the firms offering this type of service. It gives a complete action plan on how to bring forward a claim, even if the service user is deceased. These legal firms are not advertising in the hope that they will clean up the care industry, rather it appears as if they want to thrive on any mistake that could happen.

This means that the number of reported abuse cases is likely to increase, and Insurers will be looking to restrict the total liability exposure on themselves. One of the more recent changes that Insurers have made to help reduce their exposure to liability claims on a Care Home Insurance policy is to issue cover on what is known as a “claims made” basis.

“Claims made” care home insurance policies

As the name indicates, claims made policies provide cover for claims made in the period the policy is in force. Claims made policies provide cover only so long as the insured continues to pay premiums for the initial policy and any subsequent renewals. Once premiums stop, the cover stops and any claims not known or made to the insurance company during the coverage period will not be considered.

To give an example of a “claims made” care home insurance policy – a Care Home has been insured on claims made policy in 2014 to 2015, and in 2016 their broker has placed their insurance with a different insurer. Someone reports an abuse claim for an incident that occurred in 2014. As the care home had a claims made policy in 2014 and they are no longer with the same insurer, then the insurer who was providing cover in 2014 will not be liable to cover the costs of that claim.

Risk of “claims made” insurance policies

What this means to the Insured is that there is a risk of an unknown or unreported claim being made long after the policy period and not being covered because the claim was made outside of the cover period. What would you do if you were faced with a liability claim for over a million pounds that you had to settle without the assistance of your insurance company? Would it mean the end of your business? Not only does it leave you vulnerable to this type of scenario, but it can also leave you paying much higher premiums for years to come. If you have been on a claims made policy, then to ensure continuous cover you will need to remain with that insurer. What this means is that you could be forced into paying well over the market set rates for years to come if you don’t want to leave yourself exposed to a significant gap in your cover. Also, with the amount of large insurers that have pulled out of the care market in the last couple of years there are no guarantees that your broker will be able to keep you with the same insurer year on year.

Retrospective claims and “claims made” insurance policies

You have to wonder what happens if you decide to sell the business and retire? Obviously you will no longer have an active insurance policy, but that won’t stop people possibly making retrospective claims against the company for incidents that may have happened when you were responsible for it. A claims made policy means you are on your own at that point in regards to retrospective claims.

Obviously though, this type of cover is usually significantly cheaper than the more suitable, comprehensive cover also available.

So what can you do to avoid falling into this trap? Firstly, as always, make sure you read the small print. It’s not enough to simply trust the broker you have used for years to ensure you are getting the best cover. This information can be buried deep into the small print so vigilance is essential. We recommend that you make sure that liability claims on your policy are covered under a “claims occurred” policy.

Long term benefits of “Occurrence Coverage”

Claims occurred cover (or “Occurrence Coverage” as it is sometimes called) is, in our opinion, the much better, comprehensive option. Occurrence cover is insurance that provides cover for the act when it occurs regardless of when it is reported.

If you had cover under an occurrence policy in 2000 and the claim is reported today (as is often the case with abuse claims) then the claim is covered even if you are no longer with that insurer. You don’t have to renew with the same insurer year after year, leaving you free to get as many quotations as you feel suitable. It also won’t leave you with any retrospective gaps in your cover to worry about, even long after you retire.

Check your Care Home Insurance programme fulfils your requirements

So maybe it’s time to change the way you think about Care Home Insurance. More often than not cheaper is not always better, and what looks like a great deal can be something that not only has you paying far more for your Care Home Insurance moving forward, but also leaves you vulnerable to an uninsured claim hitting you personally long after you have retired. Perhaps we should show a bit more interest in what we consider to be an annoyance that we have to endure every twelve months. Become active in your Care Home Insurance programme – ask as many questions about your policy as you can, but make sure that “how much is it?” is the last question you ask and not the first.

“There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey” – John Ruskin

ALDIUM only issue Care Home insurance policies which cover liability claims on a claims occurred basis as we feel this is the most appropriate type of cover for the sector. If you are unsure of the type of cover your current broker has provided you with, or if you have any questions about your current insurance programme, call the Care Team at ALDIUM on 0151 353 3868 for a free, no obligation review of your current schedule.